Federal Reserve Unlimited QE & Market Rebound

by freshlymint

If you take a look at the Federal Reserve link below, you’ll notice that massive QE started the week of March 11th. Between March 12th and April 1st the Fed purchase 1.5T worth of assets. The market bottomed (short term, permanent who knows) a week after this QE was introduced.

If 1.5 Trillion was injected into credit markets, should we assume 1.5T from institutional investors shifted from credit markets to equities? 1T? We don’t know the number, this is just for conversation. Theoretically, how much will 1.5T push up equities. Can they really just PROP/BACKSTOP forever? I understand this is a complex question as it also have more to do with confidence, momentum trading etc. W’ere now essentially back to Jan 2019 levels for SPY and other than intense liquidity, it’s pretty fair to say that then environment is challenging at best.

Market seems, well, like it’s not actually a market anymore.

www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm